federal budget Indicators

REPEALING MILITARY PENSION REFORMS WOULD SEND WRONG FISCAL SIGNAL

February 24, 1999

WASHINGTON--Concord Coalition Policy Director Robert Bixby told the
Military Personnel Subcommittee of the House Armed Services Committee
that repealing the 1986 military pension reforms known as "Redux" would
signal a dangerous breakdown in the political will to enforce
prospective and necessary changes in entitlement programs.

"At a time when our nation is preparing for the fiscal
challenges of an aging population by debating the tough choices
involved in Social Security and Medicare reform, we can ill afford to
undo one of the few tough choices about long-term spending that already
has been made," Bixby testified.

Bixby told the subcommittee that the Concord Coalition believes
that any proposal to increase spending on national security should be
assessed by two overall criteria: Will it contribute, in a meaningful
way, to a stronger national defense; and does it accomplish this goal
in a fiscally responsible manner?

Bixby testified that Congress and the White House should keep
the following caveats in mind while considering increasing spending on
national defense.

Despite recent improvement, current fiscal policy remains unsustainable over the long-term.
Demographic factors will put an enormous strain on federal resources
early in the next century. Because no solution to this looming fiscal
crisis has been found yet, great care should be taken to avoid new
initiatives that would make the long-term outlook even worse.

It is not fiscally responsible to make long-term
commitments, such as those under consideration for military pay and
retirement reform, based on projections of large and growing budget
surpluses for "as far as the eye can see." Congress must be careful
not to over-commit surplus dollars that may or may not materialize. If
the assumed surpluses do not in fact happen, the budget would quickly
fall back into the ditch of large chronic deficits.

Military compensation is not the only, or necessarily the most important, national security priority.
A good case can now be made to increase defense spending on
acquisition, modernization, maintenance, and training as well as
compensation. But these needs must be addressed in a cost-effective
manner and the total increase, if any, must be balanced against other
national priorities.

There is little evidence to suggest that repealing the
1986 pension reforms would contribute to national security in any
meaningful way. Indeed, by drawing funds away from more critical
defense needs and re-instituting a system that was found on a
bipartisan basis to be wasteful and excessive, it may well weaken
readiness.

As a matter of long-term fiscal policy, repealing the 1986 pension reforms would be dramatic step in the wrong direction.